Major Budget tax update that affects millions of workers announced in shock move - and what it means for you
manchestereveningnews.co.ukChancellor Rachel Reeves has confirmed she will not extend a freeze on tax thresholds - in a shock Budget move for that will affect millions of workers.
The current freeze on tax thresholds - which is the point at which you start to pay tax - is due to last until April 2028. It had been widely reported that the Chancellor could increase this by a further two years until April 2030 - but she confirmed in her Budget today that she has decided against this.
This would have meant more people will be dragged into paying tax for the first time, or paying a higher rate of tax when their wages rise.
This process is known as "fiscal drag" as more of your wages end up being subject to tax without tax rates actually rising. The Institute for Fiscal Studies previously estimated that 400,000 would have been dragged into paying Income Tax for the first time, while another 600,000 people would have started paying the higher and additional rates. READ NEXT: UK Budget 2024 LIVE updates as Rachel Reeves announces changes to tax, benefits and pensions There is a personal allowance of £12,570 a year before you start to pay tax .
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